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Analysts predict loss in earnings
By Dee-Ann Durbin
Associated Press
Published on Thursday, Jul 31, 2008
DETROIT: General Motors Corp. plans to cut 15 percent of its U.S. and Canadian salaried work force — or about 5,100 jobs — by Nov. 1 as part of a plan to slash billions of dollars in costs and help the automaker ride out a slump in U.S. sales.
A GM official declined to confirm the specific numbers Wednesday but indicated they were generally accurate. The official asked not to be named because the company had not planned to release the numbers until later.
Word of the cuts came two days before GM plans to release its second-quarter earnings. Analysts surveyed by Thomson Financial are predicting a loss of $2.63 per share on revenues of $44.6 billion amid plummeting U.S. truck and sport utility vehicle sales and restructuring costs.
GM's sales outside North America grew 10 percent in the first half of this year thanks to strong growth in Russia, Brazil and other emerging markets. But it wasn't enough to keep Toyota Motor Corp. from taking the sales lead, or to offset losses at home. GM's U.S. sales fell 16 percent in the first six months of this year, sharper than the industrywide decline of 10 percent.
GM also is expected to incur heavy losses because of its share in GMAC Financial Services, which said this week it was suspending leasing incentives in Canada because of a steep drop in used vehicle values. GMAC is scheduled to report earnings today.
GM announced a $15 billion cost-cutting and cash-raising plan July 15 after its shares hit a 54-year low. The automaker said it planned to cut thousands of salaried and hourly jobs, sell assets, suspend its dividend and eliminate health care for salaried retirees over age 65.
GM's cuts are part of a multiyear downsizing as the company struggles to adjust to its shrinking U.S. market share. GM had 44,000 U.S. salaried workers in 2000; that had dropped to 32,000 by the end of last year. The company's U.S. hourly work force dropped by more than half to 57,000 last year, and an additional 19,000 hourly workers took buyouts this month.
GM shares fell 50 cents, or 4.2 percent, to close at $11.40 Wednesday.
DETROIT: General Motors Corp. plans to cut 15 percent of its U.S. and Canadian salaried work force — or about 5,100 jobs — by Nov. 1 as part of a plan to slash billions of dollars in costs and help the automaker ride out a slump in U.S. sales.
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